tv Nightly Business Report PBS November 4, 2015 7:00pm-7:31pm PST
>> announcer: this is "nightly business report" with tyler mathisen and sue herera. hitting the "like" button. facebook beats earnings targets, and the stock rises, but is the high-profile company the tech stock to own right now? starter kit. the government launches its plan to help get your nestegg for retirement growing. and medical checkup. how you can check how much your doctor gets from drug companies. all that and more tonight on "nightly business report" for wednesday, november 4th. good evening, everyone, and welcome. glad you could join us. talk about making your profile more attractive. that's what facebook just did. the social media company beating both profit and sales targets, and investors responded. adjusted earnings of 57 cents a share topped estimates, as you see there.
revenue up of $4.5 billion also came in better than consensus and was much higher than last year. investors hit the like button, sending shares of facebook initially higher in after-hours trading. the company's valuation now inching toward $300 billion. not bad for an 11-year-old. julia boorstin has the one key takeaway. >> the one key takeaway from facebook's earnings is that the social network is growing across the board. as a result, user numbers, revenue as well as earnings beat expectations. i spoke to coo sheryl sandberg, who said this broad growth showed facebook investment in advertising paying off. as the company rolls out more options like instagram and video ads, which are easy and inexpensive for marketers of all sizes to use. and it sounds like this across-the-board growth is likely to continue. facebook doesn't provide guidance, but sandberg said they're pleased with the size of advertiser demand this quarter.
thank you, julia. well, facebook appears to be firing on all cylinders, but is it a stock that belongs in your portfolio right now? david ga heraty is joining us. >> thank you, sue. >> facebook might not be your first pick, but does it belong in a portfolio that wants tech exposure? >> a portfolio that wants tech exposure and social media exposure specifically would have a hard time not owning facebook. we would say the company's growth, over 40% year-over-year increase in terms of their revenues and obviously falling through to the bottom line certainly says if anyone wants to own growth, facebook is a name to consider. the question is, does one want to pay up for growth at these levels? we do think that facebook probably over the next 12 months gets to $125, but we're certainly seeing the stock up strongly after hours. we would obviously want to find a lower price, if possible. >> david, i was thinking back to the year 2000, 1999, and the sort of four horsemen of the nasdaq -- intel, microsoft, dell
and oracle. today we have the so-called fang stocks -- facebook, amazon, apple, netflix, google, five horsemen there. of those five, which stock would be your first choice to buy at today's prices? >> well, i'm an investor that tends to look for growth at a reasonable price and i also look at total return. and if you look at those five companies, obviously, the one company that stands out as providing total return is apple. i would also say that, you know, the other things that i like with apple is its valuation relative to its growth prospects are quite strong. while there may be debate toes what extent the high-end smartphone market is mature, i think apple's numbers they came out with in the september quarter showing a doubling of revenues year over year in china says there's a lot of room to grow for apple. the other thing i would say is, looking amongst these five companies, is it's really only apple that primarily, you know, has a sticky element to it. i would say probably there is the same thing to amazon in terms of their customer list, but you look at the others, whether you look at a netflix, whether you look at a google,
whether you look at a facebook, you know, all these are companies where their customers, if they became dissatisfied, could probably switch their preferences fairly quickly and easily. >> you mentioned the customer list for amazon being sticky, so to speak, but is that enough of a reason to own the stock? >> obviously, it's not a sufficient reason in and of itself, but it certainly argues that there's perhaps a little bit more staying power with the company's business. you know, certainly, from the standpoint of amazon, we know that the company's focus has been to push through low pricing to their customers and there has been a concern on the part of investors, which i share, that amazon hasn't necessarily let the growth in terms of its top line actually fall through to its bottom line in terms of seeing earnings expand. >> you know, you're really putting your mouth where your money is. you own apple. do you own any of the others we talked about? >> with respect to the fang stocks, no. i don't own netflix. i think they could face competition from amazon, google, and also apple. with respect to looking at --
the only name i own amongst them is apple. looking at the four horsemen, if you will, back in 1999-2000, intel and microsoft i do own. >> all right, david. thank you so much. >> thank you. >> david gaherty with gva research. federal reserve chair janet yellen was on capitol hill to testify before the house financial services committee. bank regulation was on the agenda, but it was her comments on interest rates that made headlines. >> the economy will continue to grow at a pace that's sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term. and if the incoming information supports that expectation, then our statement indicates that december would be a live possibility, but importantly, that we've made no decision about it. >> yellen also dismissed
concerns that an interest rate hike could push mortgage rates way up and slow the housing recovery. she said increases would be gradual. well, last week, mortgage rates did rise to the highest level in a month, denting the number of mortgage applications that were submitted. total volume fell 0.8% according to the mortgage bankers association, but the level is still 10% higher than a year ago. well, those comments from the fed chair, yellen, weighed on stocks today, signs of a cooling jobs market didn't help either. the payroll prosser adp reported that companies added 182,000 positions last month nap was slightly better than estimates, but september's strong number was revised downward. as for stocks, the dow jones industrial average fell 50 to 17,867. nasdaq dropped more than two. the s&p 500 was off 7 1/2. kraft heinz is closing seven factories, six in the u.s., one in canada, over the next two years. the company will also cut 2,600 jobs.
when kraft and heinz merged in august, the company announced layoffs of 2,500 nonfactory employees. shares ended the day just fractionally lower. an update now on the volkswagen emissions scandal. the automaker has halted sales of certain audi models after the environmental protection agency here in the u.s. accused those cars of violating emissions standards. the models affected now are 2015 and 2016, brand-new diesel luxury models. this adds to the list, as vw has also stopped selling certain porsche cayennes and its volkswagen touareg. another sign of the economy, the amount of money borrowed for auto loans has hit a record high of almost $1 trillion, but as phil lebeau tells us, the people doing most of the borrowing may surprise you. >> reporter: americans are not only kicking the tires on new cars and trucks, they're buying them in record numbers and paying for them with bigger auto loans because new vehicle prices
have gone up. experian, which tracks millions of auto loans, says since 2011, the amount of money borrowed has climbed more than 50% to just under $1 trillion. who's borrowing the most? experian says it's people with better credit ratings. in fact, almost two-thirds of the money is going to those with prime or super prime credit scores. meanwhile, there are fewer loans going unpaid, so, the percentage of cars and trucks being repossessed remains below historical averages. still, there's a growing concern auto dealers, banks and credit unions are writing too many subprime loans to those with shaky credit records. while there has been growth in that area, one representative at experian says it's been reasonable, adding, "we're not seeing an auto loan bubble." phil lebeau, "nightly business report," chicago. reports now say that
evidence indicates that a bomb brought down a russian plane last weekend, that according to government sources. the report also says investigators are focusing on islamic state operatives or sympathizers. the plane crashed over egypt on saturday, killing all 224 people aboard. earlier in the day, british prime minister david cameron said the plane may have been brought down by a bomb and that the country was suspending flights to and from the sinai peninsula. coming up, the government's newest attempt to help you save for retirement.
the vacation rental site homeaway has agreed to be purchased by expedia in a deal worth nearly $4 billion. the move will add to expedia's large portfolio of travel brands, which include travelocity, orbits, hotels.com and more. as we reported earlier this week, san francisco voters weighed in on proposition "f," also known as the airbnb initiative, a ballot measure that would have capped the number of nights an airbnb user could rent out their home or room. the home-sharing start-up spent millions to attempt to defeat the measure, and it paid off. josh lipton reports from san francisco. >> reporter: if this was a test for airbnb, then the start-up passed with flying colors. airbnb's ceo, brian cheski addressed the vote today at a conference in san francisco.
>> obviously, the voters spoke. so, i think this has been a pretty important message. but you know, i understand -- i think that in san francisco and new york, and san francisco in particular, people are very, very perturbed about housing costs, and i'm totally sympathetic. i think at the end of the day, our mission and the mission of many of the opponents are very similar. airbnb was started because i couldn't afford to pay rent. >> reporter: airbnb is a powerhouse valued now at more than $25 billion. according to cb insights, which analyzes venture capital. and it is growing fast. the "wall street journal" says airbnb will generate revenue of $900 million this year. that's up from $250 million in 2013. from a financial perspective, san francisco isn't all that important to airbnb. the city by the bay accounts for less than 1% of global
inventory, according to beyond pricing, which tracks the vacation rental market. but a loss in san francisco could have set a bad precedent, perhaps encouraging other cities to take on the start-up. airbnb already faces regulatory challenges in new york, for example. and that's why airbnb fought proposition "f" so hard, spending $8 million to defeat the measure. supporters of proposition "f" say the measure was needed because short-term rental sites, such as airbnb, are taking housing units off the market in san francisco at a time when there is a real lack of affordable housing, and that is a hot-button issue in the city, where the median rental price for a one-bedroom apartment is now more than $3,500 per month, up 45% from just four years ago, according to zillow. the fight isn't necessarily over. share better sf, the coalition
supporting proposition "f," say that this defeat at the polls won't stop them. >> so, there's a chance that we can get something done legislatively. if not, we'll go to the ballot again next year and the year after that, if that's what it takes. >> reporter: but for now, cheski and his supporters have plenty of reasons to celebrate. in just a couple weeks, cheski will fly to paris. airbnb's largest market, where he'll mix and mingle with 6,000 hosts at a company conference. for "nightly business report," i'm josh lipton in san francisco. a big beat for michael kors is where we begin tonight's "market focus." the handbag maker trumped estimates as new products helped the company's bottom line. same-store sales did fall, but that was mostly due to the impact of a stronger dollar. shares moved up more than 8% to $42.58, making the company the second best performer in the s&p 500 index. 21st century fox reported a decline in revenue, hurt by the timing of movie releases and
disappointing results from the movie "the fantastic four." the dollar also weighed on international revenue. shares tumbled 5% to $29.65. time warner posted a beat on both the top and bottom lines, helped by its warner brothers and its hbo units, but that was overshadowed by a warning. the company saying ratings for its key domestic entertainment networks have dropped more than expected. shares tumbled more than 6% to $72.19. qualcomm reporting late earnings that beat on both the top and bottom line. still, the maker of mobile phone chips saw profits fall nearly 50% from last year on weaker sales. shares were lower in initial after-hours trading, but during the regular session, the stock was also off about 1% to $60.26. whole foods reporting revenues that missed estimates slightly. the organic supermarket chain did unveil a $1 billion buyback program. shares were off right after the close. during the regular session, the stock was down more than 1.5% to $30.77.
chesapeake energy swung to a loss in its recent quarter. the driller also cut its 2015 capital budget for the second time to cope with tumbling energy prices. shares there fell nearly 2% to $7.46. and botox maker allergen post posted record profits but shares were off a fraction, nevertheless. today the government launched its version of a savings plan aimed at getting workers who don't have access to plans like a 401(k) to start putting money away for retirement. it's called my retirement account, or myra, for short. sharon epperson has the things you need to know. good to have you here, sharon. >> good to be here, sue. >> who can open this account? >> anyone, that's the beauty of this. this is expanding nationwide for anyone to take part in, and you need to, though, make less than $131,000 a year. that is kind of the cutoff, $193,000 for couples.
it's a roth i.r.a., a version of that. and so, it has some of the same limitations, the income limitation as well as the contribution limit. you can only put in $5,500 or $6,500 if you're 60 or older. a difference, though, is you can have a maximum balance of $ $15,000, that's it. once you reach that limit, you have to roll it over into another i.r.a. >> one of the appealing things about this is basically, the principal is guaranteed, correct? >> that's another big difference. >> and where does the money go? it only goes into a certain -- >> only into a type of treasury security that was designed for this program that right now is yielding about 2% and is expected to be guaranteed and not fall in value. so, that is what a lot of people say and that's what the treasury secretary has said is the lure of this, that people who are not saving -- and we're talking about 55 million americans who do not have access to workplace retirement plan and many of those who are not contributing to an i.r.a. on their own right now. they can now do this in a safer way, in a simpler way and a way
to start them to save. >> so, it's basically a 2% savings account in an era when savings accounts aren't paying anywhere near that. >> exactly right. >> and then you can pull that money out and it's growth tax-free? >> yes, you can pull it out tax-free, just like with a roth i.r.a. and if you hit an emergency, just like a roth i.r.a., your contributions can be taken out at any time and you're not penalized on that. that's another perk. a lot of folks say, hey, why not put it in a regular i.r.a., where you have a lot of different types of investments and your money can grow. but we're talking about people who really don't have that minimum balance to put -- minimum contribution -- >> and can't afford to lose. >> can't afford to lose at all and really are frightened to save in the markets at all. >> exactly. why the $15,000 cap? because if you don't have any savings at this point, you're going to need a lot more than $15,000. >> exactly. so, they say this is another impetus to get you to put that money into a roth. once you hit that level, you kind of had training wheels to get to the $15,000 and now you're ready for the big time.
now you're going to go into a roth i.r.a., have those investment options, but you've been disciplined in saving a certain amount over a period of time and now you're ready for doing it that way. >> quickly, what if my account grows above $15,000 because of the growth, the compounding of interest? what happens? >> once you hit $15,000, you're supposed to roll it over, so you'll probably be prompted to roll it over before you hit that mark. >> sharon, thank you as always. sharon epperson. >> my pleasure. coming up, how to find out whether your doctor is getting paid by drug companies and how much.
a senate committee has launched an investigation into big price hikes by four pharmaceutical companies. they asked for documents from valent pharmaceuticals, retrofin, turin pharmaceuticals and rodelis therapeutics. the revelation comes after public outcry over the practices which first came to light when touring raised the price of one of its drugs by about 5,000%. valeiant shares were down 6%, retrofit down 13%. the other two companies are not publicly traded. yesterday we told you about a pharmaceutical company called insys therapeutics that is under investigation in several states. now some doctors associated with the company are finding themselves in hot water as well. here's a look into some of the
allegations and how you may be able to protect yourself if you have concerns about your own physician in part two of our series, "pushing pain: profits before patients." >> reporter: pharmaceutical company insys therapeutics is accused of deliberately targeting doctors who would write more prescriptions for its main drug, a highly addictive opiate called subsys fentanyl, in exchange for payments masked as speaker fees. connecticut nurse practitioner heather alfonzo pleaded guilty to accepting about $83,000 from insys in exchange for writing subsys prescriptions for her pain patients. the money was allegedly paid to alfonzo as part of insys therapeutics' speaker program, which cording to her plea was basically dinner at a nice restaurant. >> once somebody was a speaker for the company, they were expected to generate a certain number of prescriptions. and if they didn't, then they would be taken off the speaker list. >> reporter: according to fda guidelines, subsys is only meant to be used for persistent cancer
pain, but former insys sales rep shannon walsh, based in oregon, told cnbc that most of the doctors management told her to target had nothing to do with oncology or pain management. >> mostly they were general practice, internal medicine, family physicians. they just thought it was ridiculous that we were going in there calling on them. >> reporter: the top prescriber nationally, according to a health and human services office of inspector general complaint, was michigan' based neurologist dr. gavin auerbook. he's accused of engaging in health care fraud and distribution of controlled substances. among other things, the complaint said he was prescribing subsys for patients who did not have cancer and some did not even report severe pain. he billed medicare almost $7 million for subsys, mostly in 2013. in that same year, auerbook received over $54,000 from the company for things like speaker fees, travel and meals. many people might not know this, but you can actually very easily
check how much money your doctor is getting from pharmaceutical companies. this database is how we found that two physicians in mobile, alabama, dr. shulu ron and dr. john couch, partners at a practice, received over $210,000 from insys in 2013 and 2014. in may, they were arrested on drug and fraud charges. both pleaded not guilty. >> there was a level of coordination between the doctor and the sales rep and the company and the insurance company that was unusual in my experience. >> reporter: that coordination is something investigators are looking into as well. for its part, insys declined our numerous requests for comment. for "nightly business report," i'm gina gusoff ski. >> and less than a week ago, the fda granted insys fasttrack designation to approve an oral spray to treat opioid overdose.
we reached out to the doctors in the story, who are are still working in their respective clinics. only dr. ron's lawyer returned our calls. and in response to the inquiries of payments with insys, he said his speaking engagements are sought out and are not out of line in any way, "we make no apology whatsoever." gina is joining us now. tell me about the website where i can go to find out who's paying my doctor how much and for what. >> it's called openpaymentsdata.csf.gov. you type your physician's name and get a breakdown of the company that's paying him or her, exactly what the payment is for, how much of the company pays the doctor. >> whose website is it? >> it's a cms website, so it's a government website and it's an extra tool to empower the patient because sometimes we feel helpless at the doctor's office. if you're suspicious, for example, that your physician is pushing a certain drug or procedure on to you, it's a great tool to use.
and if that doctor is getting paid tens, if not hundreds of thousands of dollars from one company in particular in a very short amount of time, it might be reason to be suspicious. now, i do want to underscore that it is not uncommon for pharmaceutical companies to pay physicians. this is not something just insys is doing. this is something pretty much all pharmaceutical companies are doing. where it becomes inappropriate is if the payment doesn't match what exactly is happening, like you heard in the piece with the nurse practitioner who got paid for a speaking arrangement, which as she says, was basically dinner at a nice restaurant with someone who had no authority to prescribe a controlled substance like subsys. that's where it becomes inappropriate. >> right. the transparency issue, i know congress is taking this up. there's some new initiatives to address that. you mentioned the website where you can track your doctor. but increasingly, medical practices are using nurse practitioners either in place of doctors or in addition to doctors. are those going to be listed on this web silesite or is there a,
if they are not, to list them on the website? >> yes. there was a bill introduced, the provider payment sunshine act, which would expand the reporting requirements. right now, you can only check on your physician, but nurse practitione practitioners, anesthesiologists and assistants can also prescribe the drugs, so there is a bill hoping to add transparency. >> you made a point in the piece of pointing out that some, or maybe even some of the largest prescribers of this medicine were general practitioners. is that on its face a bad thing, if my gp tells me, here's the drug that's going to help me? should i question that? >> you shouldn't question it, but in the case of subsys, the fda indication is meant for late-stage breakthrough cancer pain. it's most likely that your general practitioner wouldn't be treating your pain with, god forbid, associated with cancer. that would be a pain management physician or oncologist, so you have to pay attention to the fda
guideline. >> what about tomorrow, quickly? third part. >> tomorrow we're going to introduce you to how the company interejects itself into the insurance process and tell you about a class-action lawsuit that some physicians have filed against insys therapeutics. >> thank you. that's it for "nightly business report" tonight. i'm sue herera, thanks for joining us. >> thanks from me as well. i'm tyler mathisen. have a great evening, everybody, and we will see you right back here tomorrow.
narrator: tonight on "quest"... wind energy is the fastest-growing source of power in the united states, but wind turbines can be deadly to birds. now biologists say there's a way to reduce bird deaths. and concussions are surprisingly common for athletes. what happens during a concussion? and what can be done to prevent brain damage? and there's a hidden danger in san francisco bay that's poisoning wildlife and people. learn how mercury pollution got here and what's being done to get rid of it. ♪ announcer: support for "quest" is provided by...